What does CAGR mean?

The compound annual growth rate (CAGR) is a useful measure of growth over multiple time periods. It can be thought of as the growth rate that gets you from the initial investment value to the ending investment value if you assume that the investment has been compounding over the time period.

How do you calculate CAGR?

To calculate the CAGR of your portfolio from the period from Jan 1, 2005 to Jan 1, 2008, you would divide the final value of your portfolio by the portfolio’s initial value ($19,500 / $10,000 = 1.95). Next, you would raise the result to the power of 1 divided by the number of years (1 / 3 = 1/3 or 0.3333).

How do you calculate CAGR in Excel?

To calculate the Compound Annual Growth Rate in Excel, there is a basic formula shown as: =((End Value/Start Value)^(1/(Periods – 1)) -1. And we can easily apply this formula as following: Step 1: Select a blank cell, for example Cell C6, enter the formula =(B11/B2)^(1/(10-1))-1 into it, and press the Enter key.

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Source: Global News

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